Banks ride economic storm


Reserve Bank of Zimbabwe building

THE country’s banking industry exhibited significant resilience against multifaceted challenges posed by the prevailing difficult environment during the first half of the year.
Banking institutions that have published first half results said profits were rising, but the operating environment remained difficult while the outlook remained bleak unless government moved to address several issues.
They cited firm closures, retreating disposable incomes and the general slowdown in industrial production among the factors affecting sector growth, and overall economic stability.
In the face of the crisis, several banks said they expanded branch networks across the country and invested significantly in digital banking initiatives during the period and reported rising turnover and profit growth.
MBCA Bank reported post-tax profits of US$2,7 million during the review period, after registering US$1,9 million during the same period the previous year, as operating income increased to US$13 million, from an operating profit of US$11,5 million, the previous year.
The bank’s operations during the review period were boosted by significant reduction in the cost of operating the business.
Chairman, Willard Zireva, said MBCA’s cost to income ratio declined to 72,6 percent during the period from 78,6 percent last year.
Ecobank lifted net operating income by 22 percent to US$11 million from US$9 million in 2014, after expanding its branches, said chairman, David Whatman.


Ecobank has been growing every year

“The bank has grown its net operating revenue for the period by 22 percent year-on-year,” Whatman said in a commentary accompanying results.
“This has been achieved on the back of increased trade finance activities, reduced cost of funds and an increased customer base as the investments in a wider network of branches and alternative service channels have begun to yield returns,” he said.
It has been a difficult period for the banking sector, which experienced serious difficulties during the post-hyperinflation period that started with dollarisation in 2009.
Several banks closed, including Trust Banking Corporation, Royal Bank, Genesis Bank, Kingdom Bank and Allied Bank, joining many others that closed between 2000 and 2008.
And after significant growth in deposits from about US$350 million in February 2009 to over US$4 billion, the growth had started softening, according to most banks.
Banks cites a widening current account deficit caused by imports pressure and limited export revenues, declining international mineral prices, a frail agricultural sector, a ballooning national debt that has increased the country’s risk profile and reduced foreign direct investment among the most serious hurdles.
But amid the slowdown, the banking industry appears to be looking into the future, with institutions such as the People’s Own Savings Bank (POSB) widening their branch network.
“As part of the bank’s delivery channel expansion strategy, the People’s Own Savings Bank has begun to take on board various agents in order to provide more convenience to customers countrywide,” said POSB, which reported a US$5,4 million profit after tax, from a loss of US$340 000 last year.
Pre-tax profits at Stanbic went up by 10 percent to US$10,5 million during the review period, from US$9,6 million last year.

POSB branch at the Kopje Plaza in Harare.

POSB branch at the Kopje Plaza in Harare.

Said Stanbic Bank: “Government should be commended for the continued engagement with international partners such as the International Monetary Fund, the World Bank and the African Development Bank…however, no solid progress has been made thus rendering a bleak outlook for the economy.”
But at Standard Chartered Bank, which recently reviewed its operations in Zimbabwe, pre-tax profit slid to US$4,4 million from US$11,7 million the previous year, the only bank to report a slowdown in profits among the banks trekked by the Financial Gazette.
During the period, banks re-emphasised the need for Zimbabwe to engage the international community for the country to access vital credit lines for on-lending to the private sector.
ZB Financial Holdings, despite being under financial restrictions, said profit before tax rose to US$4,9 million during the period, from US$1,3 million.
“The group, sadly, remains listed as a Specially Designated National by the Office of Foreign Assets Control of the United States of America Treasury Department,” said ZB.
NMBZ Holdings, which owns NMB Bank, lifted total income by 24 percent to US$29 million during the review period from US$23 million during the same period in 2014, in line with a rise in loans and advances to US$236 million from US$193 million in 2014.
The rise was also a reflection of the group’s expanded branch network, which comes after a shake up in the top chairs of the group last year, following major shareholder changes.
Pre-tax profits climbed profits climbed to US$4,2 million from US$1,8 million during the same time last year.
Other financial institutions that posted profits include CABS, CBZ and FBC.